From Board Cultural Diversity to Environmental Innovation: The Mediating Role of Diversity and Opportunity Policies and the Moderating Roles of R&D Intensity and Institutional Quality

ABSTRACT Environmental innovation requires firms to recognize complex environmental opportunities and integrate heterogeneous knowledge, stakeholder perspectives, and technological expertise. Board cultural diversity (BCD) may facilitate this process by bringing together directors with different cultural backgrounds, international experiences, and cognitive perspectives; however, these potential benefits may depend on whether diverse knowledge is effectively integrated and implemented within the firm. This study examines the association between BCD and environmental innovation and investigates the mediating role of diversity and opportunity policies (DOP) and the moderating roles of R&D intensity and institutional quality. Using a global dataset of 3250 nonfinancial firms across 58 countries over 2018–2024, we employ firm fixed‐effects regressions supplemented by System Generalized Method of Moments estimation and additional sensitivity analyses. The results show that BCD is positively associated with environmental innovation. DOP exhibits a statistically significant indirect association, consistent with complementary partial mediation, whereas the positive BCD–environmental innovation relationship is stronger at higher levels of R&D intensity and institutional quality. Theoretically, the findings support a capability‐conversion perspective in which board diversity represents a potential knowledge resource whose value depends on organizational integration, technological capacity, and institutional support. Practically, the results suggest that board diversity alone may be insufficient; firms should combine diverse boards with substantive inclusive practices and adequate R&D capacity, whereas supportive institutional environments can facilitate the translation of heterogeneous knowledge into environmental innovation.